Asda: pain to gain

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Walmart owned UK supermarket Asda saw sales up for the first time in 3 years.

Easter bunny

Easter sales bounced 16% from last year’s holiday. Minus the festival, like-for-like sales rose by 0.7%.

It’s been painful

Intense competition from discounters Aldi and Lidl has seen traditional supermarkets struggle to retain market share. This has led to the “Big 4” (Asda, Sainsbury’s, Tesco, Morrisons) slogging it out in an aggressive price war.

Asda has also been slow to react: when its rivals engaged in promotions and price cuts, it stood firm. When they invested in a convenience store roll out to match changing consumer habits, it didn’t alter its large store only policy.

Value

Asda is suffering from the discounters too.

Historically, the chain positioned itself as the budget option. But the rise of Aldi and Lidl, who have successfully reassured the public on their goods’ quality and value, has seen its market share drop as consumers question Asda’s value credentials. For instance, Asda came 3rd behind the two discounters in a YouGov poll on “Best Value”.

Strategy

New Asda CEO Sean Clarke has focussed on cutting prices and refurbishing stores. He’s also introduced a new value range, “Farm Stores”, and reduced product numbers by 25% in an attempt to mirror discounters. This has encouraged customers to buy more but operating profits have fallen.

Online shopping too is also putting pressure on the company: Asda is seeking to cut costs by making thousands of staff redundant.

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